I disagree with employee representation on the board. They may be stakeholders (as are many types of suppliers) but they are not shareholders as would be represented by board involvement. Healthy organizational structures will roll up perspectives so these can inform recommendations and board decisions, but the tail that is employees should not wag the dog.

This is not only a great idea, it is crucial for several reasons. All too often decisions are made in the boardroom without real-time information being provided from the heart of the most important client-facing areas of the business which could mean vital data is missed. Furthermore, creating a culture of openness and trust among the ever-increasing Millennial and Generation Z workforce in particular requires this level of inclusiveness and transparency from senior leaders. If confidentiality can be managed, this is an excellent move for retailers especially.

Does the board need to know what’s happening at the staff level of their organization? Absolutely. Are store-level people the best representatives for that perspective? No, not on an enterprise-wide basis. Views and potentially broad-based decisions may be skewed if the board hears only a couple points of view from only a couple stores. Anomalies will become the guideposts for policy. That’s not the way to run the business. And that’s coming from someone who worked in the stores for years.

What the board needs to do is to challenge management to visit multiple stores every week (like some well-known retailers do already), and also solicit feedback from field management regularly.

The board — which reps the shareholders — is not the place for the employee.

Retailers might consider the shareholder BoD and a Workers Board — similar to what’s done in Germany. A Workers Board in North Amarica might best be a program where regions team up with company executives and address the internal issues. The financial BoD focuses on the external issues.

The Workers Board might be a better way to think and act out teamwork focused on the operational issues without messing with the shareholder’s space.

Worker representation (on boards) is common in Europe, but as the saying goes, “we do things differently ’round here.” I’m not sure how such a change would be worked out … indeed, since the board is supposed to be representative of owners rather than “stakeholders,” I’m not sure what the legal rationale for it would be.

This is a complicated topic and I am not sure there is a black or white answer. Going off the traditional definition of a Board of Directors, the answer may lean toward no. However, given the importance of these stakeholders in the overall value and relevance of the retail experience, I would argue that employee representation or at the very least one board member that is highly engaged and knowledgeable from an employee perspective could add tremendous value to the overall discussions in the boardroom. Investors and shareholders too often focus on short-term financial results, and if they were to take a more balanced approach to building long-term value in the retail industry, it might be a step in the right direction of healthy growth, which many retailers are struggling to find these days. Borrowing from Luis Aguilar of the SEC, “It has long been recognized that good corporate governance serves to enhance the effective deployment of shareholder capital that ultimately contributes to growth and positive long-term performance. Strong corporate governance processes help companies hire… Read more »

Imagine how this really plays out when the CEO and board need to, for example, discuss a strategic plan to close 50 stores. If the goal is raising the visibility of important retail associate issues like working conditions, then putting an associate on the board, as an officer of the company, is counter-productive.

A better approach is to have an existing board member take responsibility for associate conditions, and host a presentation by an associate representative who will speak candidly about the issues.